It’s time to focus on ‘return on mission’

“Return on investment” (ROI) is a well-understood phrase in the business world.

But “return on mission” (ROM) does not appear to be a routine part of the lexicon of directors of boards for nonprofit organizations, even though a good number of them are business owners, leaders or workers in the commercial sector.

By not having a good grasp of the ROM concept, nonprofit boards may find they are not providing sound stewardship to their respective nonprofit organizations.

The current recession and its associated issues – high unemployment, poor borrowing availability, dismal housing market, lower consumer spending – provide opportunities for nonprofit boards in three areas: A wake-up call with respect to positioning their organization in their respective market space; a true opportunity to display what ROM means to their communities, constituencies and stakeholders; and showcasing how capacity building is an important component of what nonprofit organizations need.

Capacity building is the basic investment in people and systems for the betterment of provided services, delivery of those services and social impact.

If building capacity is fully recognized by foundations and venture philanthropists, it needs to be fully embraced by nonprofit boards.

Return on mission involves embracing the “social-impact” aspect of capacity building. I’m not suggesting that measuring ROM is a simple task, but systems, assessments and outcome-impact tools must be integrated into the daily operations of nonprofits.

This is something nonprofit boards should openly welcome and fully champion, as these two aspects will have a positive impact on an organization’s market position.

By making concerted efforts at building the capacity of an organization by assessing, developing and monitoring organizational aspirations, strategies, skills, human resources, systems, structures, and culture, nonprofit boards can start reversing the historic inattention on these various organizational components.

As nonprofit boards find themselves in the recovery phase of this economic downturn, they need to openly capitalize on what scholarsRichard Chait, William Ryan and Barbara Taylor call “generative thinking.”

This form of thinking is a cognitive process that unquestionably belongs in the governance structure. It expands the traditional reliance on appointed executives for leadership, and places the responsibilities into the heads and hands of all those responsible for governance: board members, executives, administrators and managers.

Board members need to take full advantage of the opportunities provided by the economic challenges that have been, and still are, before us. It is now time for all board members to take that proverbial step-up-to-the-plate position to display their leadership capacities.

By doing so, they are demonstrating that their nonprofits have weathered the storm and have the capacity to weather other storms that may present torrential rains of recession, the high winds of unemployment, the darkness of dismal markets, and the cowering brought about by a poor lending atmosphere.

Nonprofits have been known to survive many bleak circumstances, but this recent downturn will certainly need the leadership that is a natural part of their board’s makeup.

Gianfranco Farruggia, Ph.D., is associate professor of nonprofit management in the School of Business and Nonprofit Management at North Park University in Chicago.